How Buyers Forecast: Buyer – Seller Relationship as a Boundary Condition of the Impact Bias

Abstract

People frequently overestimate the impact of an event when they imagine it, relative to when they actually experience it. This phenomenon, known as the impact bias, has been well established as an intrapersonal phenomenon. We extend it to the inherently interpersonal marketing setting involving buyer – seller dyads in which the two entities are bound by a relationship, and propose a moderating effect based on the strength of the buyer – seller relationship. An online panel study and three laboratory experiments provide converging evidence such that the impact bias emerges when the buyer – seller relationship is strong, but disappears when the relationship is weak.